AIMS AND CONTENT

LEARNING OUTCOMES

The course covers the basic principles of market regulation, from market failures to the main approaches for regulating different type of prices, with a particular focus on energy markets and their special needs in term of regulation. In the first part of the course the issue of the different rationales for regulation are discussed, including the conventional rationale based on the definition of natural monopoly and the need for addressing allocative and productive efficiency; moreover, alternative ways to control or influence firms’ behavior are analyzed, like competition for the market, contestability, state ownership, reliance on competition law and negotiated agreements. In the second part of the course, after discussing the main type of industries structures typically observed in industries subject to regulation, the principles of regulation of the core network activities are analyzed, distinguishing among the principles that might inform the regulation of the activities that more closely resemble natural monopoly and those that might inform the competitive activities in the production chain. The analysis of the key pricing principles in different regulatory settings (full information, multi-product firms, imperfect information, multi-period context) is followed by the discussion of the methods by which price regulation is applied in practice to those activities where competition is limited or non-existent, like core network activities (pipes, cables, wires, rails). Such part of the course focuses on the general properties of each type of price regulation and provides a framework for the analysis of the more specific regulatory approaches applied in specific markets, with particular reference to energy markets (gas and electricity). Moreover, the course sets out the economic principles that might inform regulation in the presence of competition in some segments of the supply chain (eg. retailing or generation in energy sectors) and where the issue of the access to the network becomes relevant. The last part of the course discusses the main insights from behavioral industrial organization that has affected the regulatory principles and how such insights have been applied by regulators. Finally, after discussing the characteristics of the different institutions that influence and apply economic regulation in practice, the course analyzes the specific regulatory issues associated to energy markets. In particular the analysis includes the physical and economic characteristics of the gas and electricity sectors, the regulatory approach, the scope and effects of restructuring policies adopted in different countries and the regulatory policy issues. Within this framework, solid evidence and multiple anecdotes are delivered in order show the concrete relevance of theoretical developments and to facilitate the understanding of reality.

TEACHING METHODS

Video lectures e i-tivity  75% and in person lectures (25%)

Students who have valid certification of physical or learning disabilities  and who wish to discuss possible accommodations or other circumstances regarding lectures, coursework and exams, should speak both with the instructor and with Professor Elena Lagomarsino elena.lagomarsino@unige.it, the Department's disability liaison.

SYLLABUS/CONTENT

Chapter 6: Regulation in the presence of competition

The chapter examines economic principles for regulating in competitive settings, including the price and non-price terms for access to certain indispensable services or facilities.

Chapter 7: Behavioral Economics and Regulation

The chapter introduces key insights from behavioural economics and behavioural industrial organisation that challenge the standard assumptions about consumer decision making and firm behaviour.

Chapter 8: The Institutions of regulation

The chapter describes some of the characteristics of the institutions that apply economic regulation, such as independent economic regulators that have been established in many jurisdictions.

Chapter 9: Electicity Regulation

The chapter focus on the practice of economic regulation in the electricity industry. Describes the economic and technical characteristics of the industry; Discusses how the industry is regulated in different jurisdictions; Considers the evidence on the effects of regulation in that industry; Introduces current debates about the approach to regulation of the industry.

Chapter 10: Gas Regulation

The chapter focus on the practice of economic regulation in the gas industry. Describes the economic and technical characteristics of the industry; Discusses how the industry is regulated in different jurisdictions; Considers the evidence on the effects of regulation in that industry; Introduces current debates about the approach to regulation of the industry.

RECOMMENDED READING/BIBLIOGRAPHY

Modern Economic Regulation

An Introduction to Theory and Practice

Christopher Decker

University of Oxford

last edition

TEACHERS AND EXAM BOARD

LESSONS

LESSONS START

first semester 26-27

Class schedule

The timetable for this course is available here: Portale EasyAcademy